Viewbix Inc. (Formerly known as Virtual Crypto Technologies, Inc.)

Condensed Consolidated Statements of Cash Flows

For the Six Months Ended June 30, 2019 and 2018

(Unaudited)

The accompanying notes are an integral part of these financial statements.

Viewbix Inc. (Formerly known as Virtual Crypto Technologies, Inc.)

For the Three and Six Months Ended June 30, 2019 and 2018

Notes to Condensed Consolidated Financial Statements

(Unaudited)

Note 1. The Company and Significant Accounting Policies.U.S. dollars in thousands (except share data)

Organizational Background:Background

Viewbix Inc. (formerly known as Virtual Crypto Technologies, Inc.) (the “Company””) was incorporated in the State of Ohio in 1989 under a predecessor name, Zaxis International, Inc. (“Zaxis”). On August 25, 1995, Zaxis merged with a subsidiary of The InFerGene Company, a Delaware corporation, which entity changed its name to Zaxis International, Inc. and the Company was reincorporated in Delaware under the name of Zaxis International, Inc. On December 30, 2014, Zaxis entered into an agreement with Emerald Medical Applications Ltd., a private limited liability company organized under the laws of the State of Israel (“Emerald Israel”).

Emerald Medical Applications Ltd.

On March 16, 2015, Zaxis and Emerald Israel executed a share exchange agreement, which closed on July 14, 2015, and Emerald Israel became the Company’s wholly-owned subsidiary. Emerald Israel was engaged in the business of developing Emerald Israel’s DermaCompare technology and the development, sale and service of imaging solutions utilizing its DermaCompare software for use in derma imaging and analytics for the detection of skin cancer. On January 29, 2018, the Company ceased the DermaCompare operations of its former subsidiary.

On May 2, 2018, the District Court of Lod, Israel issued a winding-up order for Emerald Israel and appointed an Israeli attorney as special executor for Emerald Israel.

Virtual Crypto Technologies Ltd.

On January 17, 2018, the Company formed a new wholly-owned subsidiary under the laws of the State of Israel, Virtual Crypto Technologies Ltd. (the “Subsidiary”“VCT Israel”), to develop and market software and hardware products facilitating, allowing and supporting purchase and/or sale of cryptocurrencies through ATMs, tablets, personal computers (“PCs”) and/or mobile devices.

VCT Israel ceased its business operation During the beginning of Q1 2020. On January 27, 2020, VCT Israel was sold to a third party for NIS 50 ($14). The effective closing date of the transaction was February 12, 2020. The gain from the sale of the company was $8.

Transaction with Algomizer Ltd. (the “Recapitalization Transaction”)

On February 7, 2019, the Company entered into a share exchange agreement (the “Share Exchange Agreement”) with Algomizer Ltd. (TASE:ALMO), a company organized under the laws of the State of Israel (“Algomizer”), pursuant to which on the Closing Date, as defined below,July 25, 2019 (the “Closing Date”), Algomizer assigned, transferred and delivered its 99.83% holdings in Viewbix Ltd. (“Viewbix Israel”) to the Company in exchange for shares of restricted common stock of the Company, representing 65% of the issued and outstanding share capital of the Company on a fully diluted basis as of the Closing Date following the conversion of certain convertible notes of the Company into shares of the Company’s restricted common stock, and which excludesexcluding certain warrants to purchase shares of the Company’s common stockCommon Stock expiring in 2020 with an exercise price representing a valuation of the Company equal to at least $30,000,000 (“Fully Diluted Share Capital”), and additional warrants as further described below.below (the “Fully Diluted Share Capital”). In addition, upon the earlier of: (a) the launch of a live video product to an American consumer in the United States by Viewbix Israel, or (b) the launch of an interactive television product to an American consumer in the United States by Viewbix Israel, the Company will issue to Algomizer an additional 1,642,193 shares of restricted common stock of the Company representing 5% of the Fully Diluted Share Capital immediately following the Closing Date.

On February 26, 2019, stockholders holding a majority of our outstanding shares of common stock approved to effect a reverse stock split of the of Company’s common stock on a 1-for-15 basis (“Reverse Stock Split”). The Reverse Stock Split became effective on May 20, 2019, upon which each fifteen (15) shares of company’s common stock were automatically converted, without any further action by stockholders, into one

VIEWBIX INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

U.S. dollars in thousands (except share of common stock. No fractional shares were issued as the result of the reverse stock split. Instead, each stockholder was entitled to receive one share of common stock in lieu of the fractional share that would have resulted from the reverse stock split. All stock information in this Quarterly Report have been restated retroactively to reflect the effect of the Reverse Stock Split.data)

On July 24, 2019, the Company filed a Certificate of Amendment to its Certificate of Incorporation with the Secretary of State of Delaware reflecting its name change from Virtual Crypto Technologies, Inc. to Viewbix Inc. to reflect its new operations and business focus and, effective on August 7, 2019, FINRA approved the Registrant’s name change and its trading symbol was changed from VRCP“VRCP” to VBIX“VBIX” on the OTCQB.

On July 25, 2019 (the “Closing Date”),the Closing Date, the Company (i) issued 20,281,085 shares of its common stock to Algomizer in exchange for consideration consisting of consideration for its 99.83% holdings in Viewbix Israel, and (ii) 3,434,889 shares of its common stock to holders of convertible notes, ofwhich were issued by the Company prior to the Reverse Recapitalization, and which were converted upon the Closing Date. The shares of common stock were issued under Regulation S. The Company also issued a total of 7,298,636 warrants to Algomizer to purchase the Company’s common stock, whereby (i) 3,649,318 of such warrants havewere issued with an exercise price of $0.48, and (ii) 3,649,318 of such warrants havewere issued with an exercise price of $0.80.

Going Concern:As a result of the Recapitalization Transaction, Viewbix Israel became a subsidiary of the Company. As the shareholders of Viewbix Israel received the largest ownership interest in the Company, Viewbix Israel was determined to be the “accounting acquirer” in the Recapitalization Transaction. As a result, the historical financial statements of the Company were replaced with the historical financial statements of Viewbix Israel. The number of shares prior to the reverse recapitalization have been retroactively adjusted based on the equivalent number of shares received by the accounting acquirer in the Recapitalization Transaction.

The Company and its subsidiaries are collectively referred to as the “Company”. Viewbix Israel was incorporated on February 2006 in Israel. The Company has developed an interactive video platform based on Software as a Service (“SaaS”) business model with interactive elements, and the ability to collect and analyze information about each interactive action performed during the viewing of the video clip. The interactive elements and information gathered, allowing the advertiser to analyze user viewing habits and optimize real-time throughout the campaign while increasing the effectiveness of online and live video advertising.

On January 1, 2020, the Company announced certain cost reduction measures due the Company not achieving certain revenues goals.

Going Concern

The Company has incurred significant$174 in net loss for the period ended March 31, 2020, has $1,867 stockholders’ deficit as of March 31, 2020 and $1,863 in total stockholders’ deficit as of December 31, 2019 .Management expects the Company to continue to generate substantial operating losses and negative cash flows from operating activities in relation to continue to fund its operations since inception. While the Company raised approximately $1.9 million in the year ended December 31, 2018 to fund the operations, the Company will require additional capital resources in order to support the commercializationprimarily through utilization of its products and operations and maintain its research and development activities. The Company is addressing its liquidity needs by seeking additional funding from public and/or private sources. There are no assurances, however, that the Company will be able to obtain an adequate level ofcurrent financial resources that are required for the Company’s short and long-term requirements, or at all thesethrough additional raises of capital.

Such conditions raise substantial doubtdoubts about the Company’s ability to continue as a going concern. The consolidatedManagement’s plan includes raising funds from outside potential investors. However, there is no assurance such funding will be available to the Company or that it will be obtained on terms favorable to the Company or will provide the Company with sufficient funds to meet its objectives. These financial statements do not include any adjustments relating to reflect the possible future effects on recoverability and classification of assets, carrying amounts or the amountsamount and classification of liabilities that may result frombe required should the outcome of this uncertaintyCompany be unable to continue as a going concern.

VIEWBIX INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

U.S. dollars in thousands (except share data)

Basis of Presentation and Significant Accounting Policies:Principles of Consolidation:

The accompanying unaudited condensed consolidated financial statements include the accounts of the Company and its wholly ownedwholly-owned subsidiary the Subsidiary,and were prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”)

All intercompany accounts and with the instructions to Form 10-Q. transactions have been eliminated in consolidation.

Unaudited Interim Financial Information

The Company’s unaudited condensed consolidated financial statements presented herein have not been audited by an independent registered public accounting firm but include all material adjustments (consisting of normal recurring adjustments) which are,prepared in accordance with GAAP and pursuant to the opinion of management, necessary for a fair statementrules and regulations of the financial condition, results of operationsSecurities and cash flows for the period. However, these results are not necessarily indicative of results for any other interim period or for the full fiscal year. The preparation of financial statements in conformity with GAAP requires us to make certain estimates and assumptions for the reporting periods covered by the financial statements. These estimates and assumptions affect the reported amounts of assets, liabilities, revenues and expenses. Actual amounts could differ from these estimates.

Exchange Commission (the “SEC”). Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principlesGAAP have been condensed or omitted pursuant to thefrom this report, as is permitted by such rules of the Securities and Exchange Commission (“SEC”). The accompanying unauditedregulations. Accordingly, these condensed consolidated financial statements should be read in conjunction with the consolidatedaudited financial statements as of and for the year ended December 31, 2019 and the notes thereto included in ourthe Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2018,2019 filed with the SEC on March 28, 201920, 2020 (the “Annual“2019 Annual Report”). The results for any interim period are not necessarily indicative of results for any future period.

Recent Accounting Standards announcedThe unaudited condensed consolidated financial statements have been prepared on the same basis as the audited financial statements. In the opinion of the Company’s management, the accompanying unaudited condensed consolidated financial statements contain all adjustments that are necessary to present fairly the Company’s financial position and results of operations for the interim periods presented .The results for the three months ended March 31, 2020 are not necessarily indicative of the results for the year ending December 31, 2020, or for any future period.

In August 2018,As of March 31, 2020, there have been no material changes in the FASB issued ASU 2018-13, Fair Value Measurement (Topic 820): Disclosure Framework – Changes to the Disclosure Requirements for Fair Value Measurement. The amendments apply to reporting entities that are required to make disclosures about recurring or nonrecurring fair value measurements and should improve the cost, benefit, and effectiveness of the disclosures. ASU 2018-13 categorized the changes into those disclosures that were removed,Company’s significant accounting policies from those that were modified, and those that were added. The primary disclosures that were removed related to transfers between Level 1 and Level 2 investments, along withdisclosed in the policy for timing of transfers between levels. In addition, disclosing the valuation processes for Level 3 fair value measurements was removed. The amendments are effective for all organizations for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2019. Early adoption is permitted. The Company notes that this guidance will impact its disclosures beginning January 1, 2020.2019 Annual Report.

Composition:

Note 2. Convertible Notes.VIEWBIX INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

U.S. dollars in thousands (except share data)

Composition:

Composition:

VIEWBIX INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

U.S. dollars in thousands (except share data)

Composition:

Ordinary Shares:

Ordinary shares confer the right to participate in the general meetings, to one vote per share for any purpose, to an equal part, on share basis, in distribution of dividends and to equally participate, on share basis, in distribution of excess of assets and funds from the Company and they shall not confer other privileges unless stated hereunder or in the Companies Law otherwise. Some investors have standard anti-dilutive rights, registration rights, and information and representation rights.

Preferred shares (relating to Viewbix Ltd prior to the Recapitalization Transaction):

Preferred shares may have been converted into ordinary shares of Viewbix Ltd at any time. The preferred shares would have automatically converted into ordinary shares if (a) the holders of at least (i) 67% (sixty seven percent) of the issued and outstanding Preferred C/C-1 shares, (ii) a majority of the issued and outstanding Preferred B shares, and (iii) a majority of the issued and outstanding Preferred A shares, so agree in writing; or (b) in the event of an IPO.

The following convertible promissory notes bear interestconversion price for any class or series of preferred would have been subject to adjustment, as follows: at 1% per annually, are convertibleany time, upon each issuance or deemed issuance by the Company of any new securities at a price of $0.15 per share less than the applicable conversion price in effect on the date of and are repayable through January 1, 2020.immediately prior to the issuance of such new securities, the conversion price shall be reduced.

Preferred shares had priority in the distribution of dividends and upon liquidation in accordance with the Company’s Articles of Association (“AOA”). These rights may be changed if a meeting of the Company’s stockholders gather up and decides on a change of regulations in this context.

As noted above, subsequentThe preference mechanism for liquidation and the distribution of dividends gave priority to the balance sheet date, on July 26, 2019, all themost recent preferred stockholders.

The preferred shares were convertible notes were converted into 3,434,88916,199,520 ordinary shares of the Company.

Note 3. Stockholders’ Equity.Redemption

On May 2,The Company’s AOA do not provide redemption rights to the holders of the preferred shares. In the event of a liquidation event, all the funds and assets of the Company available for distribution among all the stockholders shall be distributed based on a certain mechanism as described in the Company’s AOA. Although the preferred shares are not redeemable, in the event of certain “deemed liquidation events” that are not solely within the Company’s control (including merger, acquisition, or sale of all or substantially all of the Company’s assets), the holders of the preferred shares would be entitled to preference amounts paid before distribution to other stockholders (as explained in the previous paragraph) and hence effectively redeeming the preference amount. In accordance with ASR 268 and ASC 480 “Distinguishing Liabilities from Equity”, the Company’s preferred shares are classified outside of stockholders’ deficit as a result of these in-substance contingent redemption rights

As of December 31, 209 the preferred shares were no longer outstanding

VIEWBIX INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

U.S. dollars in thousands (except share data)

Share Exchange

As detailed in Note 1, as part of the Recapitalization Transaction in July 2019, the Company issued 50,000 restricted20,281,085 shares of common stock to Algomizer in exchange for its 99.83% holdings in Viewbix Israel. The number of shares prior to the Company’s CEO and 50,000 restrictedreverse capitalization have been retroactively adjusted based on the equivalent number of shares toreceived by the Company’s CFOaccounting acquirer in the lieu of payment for services provided to the Company. The fair valueRecapitalization Transaction.As Part of the 100,000 restrictedtransaction all preferred shares was $51,300.were converted into ordinary shares

There were no issuances of warrants or options during the six month ended June 30, 2019.Warrants

The following table summarizes information of outstanding warrants as of June 30, 2019:March 31, 2020:

Note 4. Related Party Transactions.Additionally In connection with the Share Exchange Agreement, upon the earlier of: (a) the launch of a live video product to an American consumer in the United States by Viewbix Israel, or (b) the launch of an interactive television product to an American consumer in the United States by Viewbix Israel, the Company will issue to Algomizer an additional 1,642,193 shares of restricted common stock of the Company.

All of the Company’s warrants meet the US GAAP criteria for equity classification

Other than transactionsDuring January and balances related to cash and share based compensation to officers and directors and other than the issuances of convertible debt to certain investors, and payments in respect of consulting fees to certain shareholders with beneficial holdings of greater that 5% of $150,000 and $ nil during the six months ended June 30,March 2020, 50,000 class H warrants expired.

During January 2020, 38,095 class I warrants expired.

During August 2019, and 2018, respectively,a law suit was filed against the Company didand, the parent company. Algomizer claiming that the applicants were entitled to receive shares of the Company as part of the consideration in the Company’s acquisition by Algomizer. In the opinion of the Company’s management, the applicants’ claims are based on incorrect assumptions and deals with the distribution of the internal shares between the applicants and the other former shareholders of the Company before the acquisition transaction, resulting in a consideration coming to the applicants following the acquisition transaction. The understanding of the Company and its legal advisers is that the claim may not have any transactionscreate financial exposure to the Company.

In April 2017, a lawsuit was filed by a former CEO of the Company with the Tel Aviv District Court (the “Tel Aviv Court”) against the Company claiming certain damages in the total amount of $100,000, under the assertion of wrongful termination by the Company and balancesEmerald Israel. The Company believes these claims to be unsubstantiated and wholly without merit and accordingly filed its response with related partiesthe Tel Aviv Court in October of 2017. The dispute was initially heard by the Tel Aviv Court on February 13, 2020 and executive officers during these periods.a supplemental hearing has been set for March 19, which has subsequently been postponed to September 29, 2020.

As a result of March 31, 2020, the issuance ofcompany’s management, in consultation with its legal advisors, believes that their claim will be successful and should the convertible notesplaintiff be successful, they will be awarded an insignificant amount and therefore no amount has been provided for in these financial statements.

VIEWBIX INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

U.S. dollars in thousands (except share data)

Composition:

Viewbix Israel are taxed according to Israeli tax laws. The Israeli corporate tax rate is 23% in the prior years, certain may hold convertible notes allowing themyears2019 and onwards.

Viewbix Inc. is taxed according to convertU.S. tax laws. On December 22, 2017, the notes in excessU.S. enacted the Tax Cuts and Jobs Act (the “Act”), which among other provisions, reduced the U.S. corporate tax rate from 35% to 21%, effective January 1, 2018.

Deferred income taxes reflect the net tax effects of 5%temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. Significant components of the Company’s issueddeferred tax assets are as follows:

As of March 31, 2020, the Company has provided valuation allowances of $6,931 in respect of deferred tax assets resulting from tax loss carryforward and outstanding sharesother temporary differences. Management currently believes that because the Company has a history of common stock. Accordingly, such investorslosses, it is more likely than not that the deferred tax regarding the loss carryforward and other temporary differences will not be realized in the foreseeable future.

VIEWBIX INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

U.S. dollars in thousands (except share data)

As of March 31, 2020 Viewbix Israel incurred operating losses in Israel of approximately $13,237 which may be deemedcarried forward and offset against taxable income in the future for an indefinite period.

As of March 31, 2020 the Company generated net operating losses in the U.S. of approximately $18,390 Net operating losses in the U.S. are available through 2035. Utilization of U.S. net operating losses may be subject to be related parties under Item 404(a) of Regulation S-K. In addition, certain investors receive fees for consulting services providedsubstantial annual limitation due to the Company, as noted above.“change in ownership” provisions of the Internal Revenue Code of 1986 and similar state provisions. The annual limitation may result in the expiration of net operating losses before utilization.

Composition:

VIEWBIX INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

U.S. dollars in thousands (except share data)

Balances:

As part of the agreement with Algomizer, the parties agreed to have the Company’s operations outsourced to Algomizer from the agreement date and until the acquisition is consummated. The following term were included in the agreement pursuant to the above:

No amounts were paid by the Company to Algomizer during 2020 and 2019 in respect of the above, which resulted in a parent company payable of $1,611 as of December 31, 2019 and $1,795 as of March 31, 2020.

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS AND RESULTS OF OPERATIONS

Special Note Regarding Forward-Looking Statements

The following management’s discussion and analysis section should be read in conjunction with the Company’s unaudited financial statements as of June 30,March 31, 2020 and 2019, and 2018, and the relatedstatements of comprehensiveloss, statement of changes in stockholders’ equity (deficit) and statements of cash flows for the three and six months periods then ended, and the related notes thereto contained in this Quarterly Report on Form 10-Q (this “Quarterly Report”). This management’s discussion and analysis section contains forward-looking statements, such as statements of the Company’s plans, objectives, expectations and intentions. Any statements that are not statements of historical fact are forward-looking statements. When used, the words “believe,” “plan,” “intend,” “anticipate,” “target,” “estimate,” “expect” and the like, and/or future tense or conditional constructions “will,” “may,” “could,” “should,” etc., or similar expressions, identify certain of these forward-looking statements. These forward-looking statements are subject to risks and uncertainties that could cause actual results or events to differ materially from those expressed or implied by the forward-looking statements. These factors include those contained in section captioned “Risk Factors” of the Company’s Annual Report on Form 10-K, filed with the Securities and Exchange Commission (the “SEC”) on March 29, 201920, 2020 (the “Annual Report”). The Company’s actual results could differ materially from those contemplated in these forward-looking statements as a result of these factors. The Company does not undertake any obligation to update forward-looking statements to reflect events or circumstances occurring after the date of this Quarterly Report.

Overview and background

On January 17, 2018, Viewbix Inc. (formerly known as(f/k/a Virtual Crypto Technologies, Inc., f/k/a Emerald Medical Applications Corp.) (“we”, “us”, “our”, the(the “Registrant” or the “Company”) formed Virtual Crypto Technologies Ltd.is an interactive video technology and data platform that provides its clients with deep insights into their video marketing performance as a wholly-owned subsidiary under the laws of the State of Israel (“Virtual Crypto Israel”) and appointed Mr. Alon Dayan, who has servedwell as the Registrant’s Chief Executive Officer since June 30, 2018 and has been a membereffectiveness of the Company’s Board of Directors since March 14, 2018, as CEO of Virtual Crypto Israel. Virtual Crypto Israel was formed to develop and market software and hardware products facilitating, allowing and supporting purchase and/or sale of cryptocurrencies through ATMs, tablets, PCs and/or mobile devices (the “Products”).

During the year ended December 31, 2018 and through the Closing Date of the Share Exchange Agreement (as defined below), the Company continued its development of the Products.messaging.

Recent Developments

Share Exchange Agreement

On February 7, 2019, wethe Company entered into a share exchange agreement (the “Share Exchange Agreement”) with Algomizer Ltd. (TASE:ALMO), an Israeli Corporationa company organized under the laws of the State of Israel (“Algomizer”), pursuant to which on the Closing Date, as defined below,July 25, 2019 (the “Closing Date”), Algomizer assigned, transferred and delivered its 99.83% holdings in Viewbix Ltd., an Israeli corporation (“Viewbix Israel”), to usthe Company in exchange for shares of restricted common stock, par value $0.0001 per share of the Company (the “Common Stock”), representing 65% of the issued and outstanding share capital of the Company on a fully diluted basis as of the Closing Date, following the conversion of certain convertible notes of the Company and excluding certain warrants to purchase shares of common stock, which will expireCommon Stock expiring in 2020 and with an exercise price representing a valuation equal to $30,000,000 (“Fullyadditional warrants as further described below (the “Fully Diluted Share Capital”). In addition, upon the earlier of: (a) the launch of a live video product to an American consumer in the U.SUnited States by Viewbix Israel, or (b) the launch of an interactive television product to an American consumer in the U.S.United States by Viewbix Israel, we willthe Company agreed to issue to Algomizer an additional 1,642,193 shares of restricted common stock of the CompanyCommon Stock representing 5% of the Fully Diluted Share Capital.

Furthermore, on the Closing Date, we issued to Algomizer: (i) warrants to purchase shares of restricted common stock with an exercise price representing a valuation for the Company of $15,000,000 on Fully Diluted Share Capital basis, representing 10% of the Fully Diluted Share Capital immediately following the Closing Date, which warrants will be exercisable for a period of ten (10) years, and (ii) warrants to purchase shares of restricted common stock with an exercise price representing a valuation for the Company of $25,000,000 on Fully Diluted Share Capital basis, representing 10% of the Fully Diluted Share Capital immediately following the Closing Date, which latter warrants will be exercisable for a period of ten (10) years.

The closing of the Share Exchange Agreement was conditioned upon us filing an amendment to our certificate of incorporation to change the Company’s name to Viewbix Inc. (the “Name Change”), effecting a reverse split of our shares of common stock at a ratio of 1:15 (the “Reverse Stock Split”), converting our outstanding convertible notes into shares of restricted common stock, and Algomizer obtaining a tax pre-ruling from the Israeli Tax Authority relating to the Share Exchange Agreement (“Israeli Tax Ruling”).

On February 26, 2019, stockholders holding a majority of our outstanding shares of common stock approved an amendment to our certificate of incorporation in order to effect the Reverse Stock Split. The Reverse Stock Split became effective on May 20, 2019, upon which each fifteen (15) shares of our common stock were automatically converted, without any further action by our stockholders, into one share of common stock. No fractional shares were issued as the result of the reverse stock split. Instead, each stockholder was entitled to receive one share of common stock in lieu of the fractional share that would have resulted from the reverse stock split. All stock information in this Quarterly Report have been restated retroactively to reflect the effect of the Reverse Stock Split.Date.

On July 24, 2019, and in connection with the RegistrantShare Exchange Agreement, the Company filed a separate Certificate of Amendment to its Certificate of Incorporation with the Secretary of State of Delaware reflecting its name change from Virtual Crypto Technologies, Inc. to effect the Name Change, thereby reflecting ourViewbix Inc. to reflect its new operations and business focus and, effective onfocus. On August 7, 2019, FINRA approved the Registrant’s Name Changename change and its trading symbol was changed from VRCP“VRCP” to VBIX“VBIX” on the OTCQB.

On July 25, 2019 (the “Closing Date”),the Closing Date, (i) the Company completed the transaction and issued 20,281,085 shares of its common stockCommon Stock to Algomizer in exchange for consideration forconsisting of 99.83% holdings in Viewbix Israel, and (ii) convertible notes representing 3,434,889 shares of its common stockCommon Stock then currently issued to holders of convertible notes of which were converted upon the Closing Date.converted. The shares of common stockCommon Stock were issued under Regulation S. The Company also issued a total of 7,298,636 warrants to Algomizerpurchase shares of Common Stock to purchase the Company’s common stock,Algomizer, whereby (i) 3,649,318 of such warrants haveto purchase shares of Common Stock were issued with an exercise price of $0.48, and (ii) 3,649,318 of such warrants haveto purchase shares of Common Stock were issued with an exercise price of $0.80.

ViewbixIsrael, through its ViewBix Studio, provides its clients with a video engagement platform designed to add enhanced branding and interactive elements – from call-to-action buttons to email captures – to digital videos. ViewBix Studio is simple, intuitive and requires no coding experience, thereby enabling clients to enhance videos and publish them across any platform, for any device in just minutes. Videos enhanced byFollowing the Closing Date, Viewbix Israel are compatible with existing ad serving, measurement and analytics platforms and easily work within existing agency or client processes for launching advertising campaigns. Beyond adding interactions to video,became a subsidiary of the Registrant. Viewbix Israel uses second-by-second measurement of engagements to uncover contextual insights as to what, when and how users are engaging or responding to brand messaging.was incorporated in February 2006 in Israel.

On July 25, 2019, Mr. Eyal Ben Ami notifiedJanuary 1, 2020, the Company that he resigns fromannounced certain cost reduction measures due the Company not achieving certain revenues goals. In connection with these cost reduction measures, on January 1, 2020, Mr. Jonathan Stefansky, the Company’s board of directors effective immediately prior to and contingent upon the Closing. Mr. Ben Ami’s resignation was not a result of any disagreement with the Company on any matter relating to the Company’s operations, policies or practices.

On July 25, 2019, Mr. Alon Dayan, the Company’s currently servingthen chief executive officer and Mr. Gadi Levin, the Company’s currently serving chief financial officer, each tendered their resignations from their respective positions effective immediately prior to and contingent upon the Closing. Mr. Dayan will continue to serve the Company as a member of the Company’s board of directors, tendered his resignation from the Board, and on the same date the sides reached a mutual understanding whereby Mr. Stefansky would step down as chief executive officer, effective March 1, 2020. On the same date, the Company and Mr. Levin will transition toHillel Scheinfeld, the role of senior accounting consultant.

On July 25, 2019,Company’s then chief operating officer, reached a similar mutual understanding and agreed he would step down, also effective March 1, 2020. Mr. Noam Band, 48,Amihay Hadad, the Company’s chief financial officer, was appointed to the Company’s board of directors whereon January 1, 2020, and, effective as of March 1, 2020, he will assume the role of chairman of the board of directors. Since 2013, Mr. Band has served as Algomizer’s chief executive officer and chairman of its board of directors. Mr. Band holds both a B.A. in economics and an MBA from the Hebrew University in Jerusalem.

On July 25, 2019, Mr. Jonathan Stefansky, 47, was elected to the Company’s board of directors andalso appointed as the Company’s chief executive officer. Mr. Stefansky previously co-founded Viewbix Israel and currently servesofficer as its chief executive officer. Mr. Stefansky holds a B.A. in management information systems from Yeshiva University, New York, and an MBA from Baruch College’s Zicklin School of Business, New York.

well.

On July 25, 2019, Mr. Amihay Hadad, 42, was appointed by the Company’s board of directors to serve as the Company’s chief financial officer. From 2011 until 2018, Mr. Hadad served as the chief financial officer of Yedioth Internet and thereafter was appointed as chief financial officer of Algomizer. Mr. Hadad holds both a B.A. and an MBA from the College of Management Academic Studies in Rishon LeZion, Israel, and an M.A. in law from Bar-Ilan University, Israel. Mr. Hadad is also a certified public accountant in Israel.

On July 25, 2019, Mr. Hillel Scheinfeld, 48, was appointed by the Company’s board of directors to serve as the Company’s chief operating officer. Mr. Scheinfeld co-founded Viewbix Israel in 2007, and thereafter served as its chief operating officer. Mr. Scheinfeld holds a B.S. in finance from Yeshiva University, New York.

There are no arrangements or understandings between Mr. Band, Mr. Stefansky, Mr. Hadad or Mr. Scheinfeld, respectively, and any other persons, pursuant to which each of them was selected as a director or officer of the Company. There are no additional current or proposed transactions betweenJanuary 27, 2020, the Company and Mr. Band, Mr. Stefansky, Mr. Hadad or Mr. Scheinfeld, respectively, or any of their immediate family members that would require disclosure under Item 404(a) of Regulation S-K.

Pursuantentered into an agreement with a third-party to the Israeli Tax Ruling, the Registrant ceased the options ofsell Virtual Crypto Israel upon the Closing Date of the Share Exchange Agreement.

No new compensatory arrangements were entered into in connection with the aforementioned leadership changes.

The appointment of the new directors came into effect ten (10) days subsequent to the Closing Date.Technologies Ltd. for NIS 50,000 ($14, 459), which transaction was consummated on February 12, 2020.

Results of Operations

Results of Operations During the Three Months Ended June 30, 2019March 31, 2020 as Compared to the Three Months Ended June 30, 2018March 31, 2019

Our revenues were $37 thousand for the three months ended March 31, 2020, with a slight increase compared to $34 thousand during the same period in the prior year.

Our cost of revenues were $4 thousand for the three months ended March 31, 2020, with a slight increase as compared to $2 thousand during the same period in the prior year.

Our research and development expenses were $16,039$59 thousand for the three months ended June 30, 2019,March 31, 2020, as compared to $266,954$36 thousand during the same period in the prior year. The decrease wasreason for the increase in the three months ended March 31, 2020 is due to downsizing of the research and development teamfact that certain expenses and slowdownduring the same period in the developmentprior year were incurred and paid for our virtual crypto products.by Algomizer in accordance with the Share Exchange Agreement.

Our generalselling and administrativemarketing expenses decreased to $249,303were $7 thousand for the three months ended June 30, 2019March 31, 2020, as compared to $356,515$80 thousand during the same period in the prior year. The reason for the decrease in 2019 wasthe three months ended March 31, 2020 is due to non-cash consulting expenses in 2018 paid by way of issuances of the Company’s shares and warrants tofact that on January 1, 2020, the Company announced a certain consultants who assisted in the establishment of the virtual crypto business.cost reduction measures.

Interest expense decreasedOur general and administrative expenses increased to $3,830$175 thousand for the three months ended June 30, 2019,March 31, 2020 as compared to interest expenses of $2,615,760$121 thousand during the same period in the prior year. The income duringreason for the periodincrease in 2019 was primarilythe three months ended March 31, 2020 is due to the consolidation of the additional subsidiaries as a result of the changesconsummation of the terms ofShare Exchange Agreement, which generated certain convertible notes that occurredgeneral and administrative expenses. Furthermore, in contrast to the three month period during the prior year, during the three months ended June 30, 2019. The significantMarch 31, 2020, the Company incurred various fees and expenses in 2018 isrelated to its status as a result of the changes of the terms ofpublic company, including certain convertible notes that occurred duringcompliance and consultancy related fees and expenses.

Our financial income was $28 thousand for the three months ended June 30, 2018, primarily, the decrease in the conversion price per share from $2.1 to $0.15 per share.

Results of operations during the six months ended June 30, 2019, asMarch 31, 2020, compared to the six months ended June 30, 2018

Our research and developmentfinancial expenses were $25,452 for the six months ended June 30, 2019, as compared to $630,965of $24 thousand during the same period in the prior year. The increase wasreason for the financial income in the three months ended March 31, 2020 is due to research and development expenses incurredthe US dollar exchange rate increase during the three months ended March 31, 2020 as compared to a result ofdecrease during the development for our virtual crypto products.same period in the prior year.

Our general and administrative expenses decreased to $440,513tax on income was $2 thousand for the sixthree months ended June 30, 2019,March 31, 2020, as compared to $1,420,798$20 thousand during the same period in the prior year. The reason for the decrease in 2019 wasthe three months ended March 31, 2020 is due to non-cash consulting expenses paid via the issuances of the Company’s shares of common stock and warrants in 2018 to certain consultants who assisted in the establishment of our virtual crypto operations.

Interest income increased to $112,135 for the six months ended June 30, 2019, as compared to an expense of $21,989,842fact that during the same period in the prior year. The income duringyear the period in 2019 was primarily as a result of the changes of the terms of certain convertible notes that occurred during the six months ended June 30, 2019. The significantCompany recognized one-time tax expenses in 2018 is as a result of the changes of the terms of certain convertible notes that occurred during the six months ended June 30, 2018, primarily, the decrease in the conversion price per share from $0.14 to $0.01 per share.for prior years.

Liquidity and Capital Resources

Our balance sheet as of June 30, 2019March 31, 2020 reflects current assets of $252,243$160 thousand, consisting of $110 thousand cash of $233,299and cash equivalents and other receivables of $18,944.$50. We also have $1,089,146$2,027 thousand in current liabilities, consisting of $105,848$232 thousand in other accounts payables and payable and accrued liabilities, $10,556 in accrued interest payable, short-term portionto Algomizer of convertible notes of $503,217 and liabilities held for sale of $469,525.$1,795 thousand. As of December 31, 2018,2019, we had current assets of $558,677$225 thousand mainly consisting of $499,919$87 thousand in cash, and other receivables of $41,516$138 thousand and short-term investmentrestricted cash of $17,242.$2. As of December 31, 2018,2019, we had $975,153$1,923 thousand in current liabilities consisting of $13,115$312 thousand in other accounts payables and $1,611 thousand payable and accrued liabilities, $7,064 employee payable, short-term portion of convertible notes of $485,449 and liabilities held of sale in respect of our discontinued operations of $469,525.to Algomizer.

We had negative working capital of $836,903$1,867 thousand as of June 30, 2019,March 31, 2020, as compared to negative working capital of $416,476 at$1,693 thousand on December 31, 2018.2019. Our total liabilities as of June 30, 2019March 31, 2020 were $1,089,146,$2,027 thousand, as compared to $975,153 at$1,923 thousand on December 31, 2018.2019.

During the period ended March 31, 2020, we had positive cash flow from operations of $10 thousand, which was the result of a net loss of $174 thousand, an increase in payable to Algomizer in the amount of $186 thousand, decrease in other payables of $55 thousand and decrease in prepaid expenses and other receivables of $88 thousand.

During the period ended June 30,March 31, 2019, we had negative cash flow from operations of $281,497,$36 thousand, which was the result of a net loss of $353,830,$249 thousand, increase in payable to Algomizer in the amount of $146 thousand and decrease in provision for settlementstrade payables of convertible loan of $145,932,$71 thousand and increase in accrued interestprepaid expenses and amortizationother receivables of discount on convertible notes of $17,768 loss from marketable securities $2,635 and $79,335 shares and warrants issued for services, offset by net changes in working capital of $118,797.

During the period ended June 30, 2018, we had negative cash flow from operations of $935,193, which was the result of a net loss of $24,041,605, depreciation expense of $14,290, increase in accrued interest and amortization of discount on convertible notes of $523,481, increase in provision for settlements of convertible loan of $21,472,897, $1,044,144 worth of shares and warrants issued for services, $50,000 in proceeds from deferred revenues, and gain from marketable securities of $8,323, offset by net changes in working capital of $9,923.

During the three months ended June 30, 2019, we had positive cash flow from investing activities of $14,607 which was the result of selling marketable securities, as compared to nil at June 30, 2018.

During the period ended June 30, 2019, we had no cash flow effect from financing activities.

During the period ended June 30, 2018, we had positive cash flow from financing activities of $2,041,013, which was the result of $1,940,950 received from sale of common stock and related warrants (net of issuance expenses), $100,000 received from the issuance of short-term convertible notes, and $63 from the exercise of options.$14 thousand .

There are no limitations in the Company’s Certificate of Incorporation on the Company’s ability to borrow funds or raise funds through the issuance of shares of its common stock to affect a business combination. The Company’s limited resources and lack of having cash-generating business operations may make it difficult to borrow funds or raise capital. The Company’s limitations to borrow funds or raise funds through the issuance of restricted capital stock required to effect or facilitate a business combination may have a material adverse effect on the Company’s financial condition and future prospects, including the ability to complete a business combination.

Until such time as the Company can generate substantial revenues, the Company expects to finance its cash needs through a combination of the sale of its equity and/or convertible debt securities, debt financing and strategic alliances and collaborations. The Company does not have any committed external source of funds. To the extent that the Company raises additional capital through the sale of its equity and/or convertible debt securities, the ownership interest of its stockholders will be diluted, and the terms of these securities may include liquidation or other preferences that adversely affect the rights of our common stockholders. Debt financing, if available, may involve agreements that include covenants limiting or restricting our ability to take specific actions, such as incurring additional debt, making capital expenditures or declaring dividends. To the extent that debt financing ultimately proves to be available, any borrowing will subject us to various risks traditionally associated with indebtedness, including the risks of interest rate fluctuations and insufficiency of cash flow to pay principal and interest, including debt of an acquired business. If the Company raises funds through additional collaborations or strategic alliances with third parties, we may have to relinquish valuable rights to our future revenue streams and/or distribution arrangements. No assurance can be given that any future financing will be available or, if available, that it will be on terms that are satisfactory to the Company. If the Company is unable to raise additional funds through equity and/or debt financings when needed or on attractive terms, the Company may be required to delay, limit, reduce or terminate the operations of some or all of its business segments.

Going Concern:

The Company has incurred significant$174 in net losses for the three months ended March 31, 2020, has $1,867 stockholders’ deficit as of March 31, 2020 and $1,693 in total stockholders’ deficit as of December 31, 2019. Management expects the Company to continue to generate substantial operating losses and negative cash flows from operating activities in relation to continue to fund its operations since inception. While the Company raised approximately $1.9 million in the year ended December 31, 2018 to fund the operations, the Company will require additional capital resources in order to support the commercializationprimarily through utilization of the its products and maintain its research and development activities. The Company is addressing its liquidity needs by seeking additional funding from public and/or private sources. There are no assurances, however, that the Company will be able to obtain an adequate level ofcurrent financial resources that are required for the Company’s short and long-term requirements, or at all thesethrough additional raises of capital.

Such conditions raise substantial doubtdoubts about the Company’s ability to continue as a going concern. The consolidatedManagement’s plan includes raising funds from outside potential investors. However, there is no assurance such funding will be available to the Company or that it will be obtained on terms favorable to the Company or will provide the Company with sufficient funds to meet its objectives. These financial statements do not include any adjustments relating to reflect the possible future effects on recoverability and classification of assets, carrying amounts or the amountsamount and classification of liabilities that may result frombe required should the outcome of this uncertaintyCompany be unable to continue as a going concern.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Not required for smaller reporting companies.

ITEM 4. CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

As of June 30, 2019,March 31, 2020, the Company’s Chief Executive Officer and Chief Financial Officer, which is currently the same individual, conducted an evaluation (the “Evaluation”) regarding the effectiveness of the Company’s disclosure controls and procedures (as defined in Rules 13a-15(e) or 15d-15(e) under the Exchange Act. Based upon the evaluation of these controls and proceduresEvaluation, as required by Rules 13a-15 or 15d-15, the Company’s Chief Executive Officer and Chief Financial Officer concluded that the Company’s disclosure controls and procedures were effectiveineffective as of the end of June 30, 2019 underMarch 31, 2020, and pursuant to the Committee of Sponsoring Organizations of the Treadway Commission in Internal Control-Integrated Framework (2013) because of certain material weaknesses.

Changes in Internal Control Over Financial Reporting

There were no changes in our internal control over financial reporting or in other factors identified in connection with the evaluation required by paragraph (d) of Exchange Act Rules 13a-15 or 15d-15 that occurred during the quarter ended June 30, 2019March 31, 2020 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

Inherent Limitations on Effectiveness of Controls and Procedures

The Company’s management, including our Chief Executive Officer and Chief Financial Officer, does not expect that the Company’s disclosure controls and procedures or its internal controls will prevent all errors and all fraud. A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. The Company’s control systems are designed to provide such reasonable assurance of achieving their objectives. Further, the design of a control system must reflect the fact that there are resource constraints and the benefits of controls must be considered relative to their costs. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within the Company have been detected. These inherent limitations include, but are not limited to, the realities that judgments in decision-making can be faulty and that breakdowns can occur because of simple error or mistake. Additionally, controls can be circumvented by the individual acts of some persons, by collusion of two or more people, or by management override of the control. The design of any system of controls also is based in part upon certain assumptions about the likelihood of future events and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions. Over time, controls may become inadequate because of changes in conditions, or the degree of compliance with the policies or procedures may deteriorate. Because of the inherent limitations in a cost-effective control system, misstatements due to error or fraud may occur and not be detected.

PART II - OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

We are currently not involved in any litigation that we believe could have a material adverse effect on our financial condition or results of operations, except as set forth below. There is no action, suit, proceeding, inquiry or investigation before or by any court, public board, government agency, self-regulatory organization or body pending or, to the knowledge of the executive officers of our company,the Company, threatened against or affecting our company,the Company, our common stock, our officers or directors in their capacities as such, in which an adverse decision could have a material adverse effect, other than as set forth below.

On August 7, 2019, Viewbix IsraelLtd. was named as a co-defendant in a civil lawsuit filed with the Jerusalem District Court (the “Jerusalem Court”) by three shareholders of Viewbix Israel (theLtd. (in this section, the “Shareholders”), alleging that they were entitled to receive certain preferred shares in Viewbix Israel,Ltd., pursuant to a certain 2007 loan agreement by and between Viewbix IsraelLtd. and the petitioning shareholders,Shareholders, following the sale of Viewbix IsraelLtd. shares to Algomizer Ltd. (the “Conversion”). The Shareholders have sought declaratory recourse from the Jerusalem Court, throughpursuant to which the Shareholders demand,demanded,inter alia, shares in Algomizer Ltd. on a post-Conversion basis or in a form of alternative compensation. On February 27, 2020, the parties presented their respective arguments before the Jerusalem Court, and the Jerusalem Court determined that the Company is entitled to file a motion for dismissal of the claims by the Shareholders by March 31, 2020, which has subsequently been postponed to May 30, 2020.

In AprilJune 2017, a lawsuit was filed with the Tel Aviv court by Mr. WaynDistrict Court (the “Tel Aviv Court”) against Emerald Israel, and other defendants, claiming certain damages toin the total amount of approximately $100,000, under the assertion of wrongful dismissaltermination by the Registrant and Emerald IL. The Registrant believesIsrael. We believe these claims to be unsubstantiated and wholly without merit and intendsaccordingly filed its response with the Tel Aviv Court in October of 2017. The dispute was initially heard by the Tel Aviv Court on February 13, 2020 and a supplemental hearing has been set for March 19, 2020, which has subsequently been postponed to defend itself against these claims. The Company believes that he will not be successful in his claim. Nevertheless, the outcome of the proceeding will not materially affect the Registrant.

September 29, 2020.

In December 2017, a liquidation request was filed with the Tel Aviv District Court by a group of former employees of Emerald IL, underIsrael (the “Employees”), which included claims of insolvency and the assertion of delay of pay and insolvency.failure to make timely payments to the Employees. On December 20, 2017, at a hearing before the court, itTel Aviv Court, Emerald Israel was ordered that the Emerald IL shallto settle its pension debts to the former employeesEmployees under the applicable Israeli law within 21 days and settle its other debts to them inwith the Employees within 60 days, the failure of which would result inrequire the winding up of the Company. On May 2, 2018, the Tel Aviv Court gave an order to liquidate Emerald Israel and appointed a winding-up order (the equivalent of a liquidation) could be given. Based on the collaboration of Emerald IL and its former employees and the fact that the Company was in negotiation with third-partiesspecial executor for the infusion of equity capital and has started negotiating the sale of certain assets, the Company’s legal advisors believe that the liquidation claim will be dismissed by the court.this purpose. The amounts being claimed by the former employees wasEmployees is less than $96,000 and are included in current liabilities at December 31, 2018.

On January 29, 2018,will be awarded by the Registrant transferredspecial executor upon the ordinary shares of the Registrant’s former Israeli subsidiary, Emerald IL to Attorney Eviatar Knoller, Esq., with offices at 20 Lincoln, Tel Aviv-Jaffa 6713412, as trustee (the “Trustee”). The purpose of the transfer of the management shares to the Trustee, pursuant to resolution of the Registrant’s Board of Directors, was to enable the Trustee to liquidate the management shares and/or the assetssale of Emerald IL to satisfy its debts and satisfy its financial obligations to former employees. As a result, the former employees of Emerald IL commenced an action in a court of competent jurisdiction in Israel to liquidate Emerald IL and use any assets to satisfy the debts owed to the former employees.Israel’s assets.

ITEM 1A. RISK FACTORS

Not applicable.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

None.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

None.

ITEM 4. MINE SAFETY DISCLOSURE

Not applicable.

ITEM 5. OTHER INFORMATION

On May 2, 2019 the Company issued 50,000 shares of its common stock to the Chief Executive Officer and 50,000 shares of its common stock to the Chief Financial Officer in consideration for services provided to the Company during the first quarter of 2019.None.

On July 25, 2019, the Closing Date of the Share Exchange Agreement, the Company issued 20,281,085 shares of its common stock to Algomizer in consideration for 99.83% holdings in Viewbix Israel, and 3,434,889 shares of its common stock to holders of convertible notes of which were converted upon the Closing Date. The shares of common stock were issued under Regulation S. The Company also issued a total of 7,298,636 warrants to Algomizer to purchase the Company’s common stock, whereby (i) 3,649,318 of such warrants have an exercise price of $0.48, and (ii) 3,649,318 of such warrants have an exercise price of $0.80.

ITEM 6. EXHIBITS

(a) The following documents are filed as exhibits to this Quarterly Report or incorporated by reference herein.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.